AllianceBernstein (AB) analysts say recent public calls to slow the development of advanced artificial intelligence will probably not meaningfully disrupt the investment and financing programmes of the largest technology companies. Thierry Taglione, AB’s lead fixed-income investment strategist, argued that hyperscalers and data-center operators have financing plans set up for long time horizons and are unlikely to be derailed by a few days of commentary.
Near-term outlook: capex likely to rise further
AB expects that the largest AI players’ nominal capital expenditures could exceed $1,000 billion next year. The firm points to the multi-year — often decade-spanning — nature of hyperscaler and data-center investment cycles, which are supported by advance financing plans and credit structures.
There has already been some market correction in technology equities as investors reacted to safety concerns and questions about whether the huge infrastructure outlays will pay off. Nevertheless, AllianceBernstein still expects hyperscalers to increase nominal capex in the short term.
Bond issuance and market impact
According to AB, bond issuance related to major global hyperscalers and data centers has already topped $330 billion year-to-date — an unprecedented volume in the firm’s view. That heavy issuance has contributed to upward pressure on yields at the long end of the US government bond market.
Longer term: slowdown and risks
Over a longer horizon, AB is more cautious. The firm forecasts that capex growth may gradually slow over the next few years and could ultimately fade, which would exert a drag on overall US economic growth.
Taglione emphasized that there remain many open questions about the sustainability of AI-driven growth and whether the large infrastructure investments will prove profitable over time.
Differentiation among companies: risk management and investment preferences
AB sees opportunities in the sector but says it is increasingly important to distinguish among companies. Taglione recommends favouring firms with strong free cash flow and lower leverage, while treating more stretched balance sheets with reduced weight. Volatility is expected to persist, even as long-term financing programmes of technology firms remain intact, according to AllianceBernstein.
Chinese tech companies take a different approach
The analysis notes that Chinese technology firms are spending and borrowing far more cautiously than their Western counterparts. Rather than undertaking massive data-center expansions, they are prioritizing hiring qualified personnel. That divergence is already visible in the relative pricing of bonds and is likely to continue unless access to advanced chips changes materially.
Disclaimer
This article does not constitute investment advice or a recommendation.
